Eclectic Trend Lines Mix

We are one week away from Christmas and I expect most of you are more concerned about your last minute holiday preparations than looking at charts. For whoever is left I decided to nourish your manic compulsive charting addictions with an eclectic mix of long term trend lines worth keeping an eye on:

NYUPV:NYDNV – we are looking at a ratio between the NYSE up volume and its down volume. In the past six months this ratio is bouncing between two parallel trend lines, the upper one is on a slight rise. The bottom happens to be situated almost exactly at the 1.0 mark and it is there where usually bounces occur. They can be short term as well as medium term.

Here’s the Dollar – always looking ready to slide into the abyss. However the monthly chart reveals two converging trend lines, and we are near the tip of it. It’s also sitting between the 100-month and the 25-month SMAs – thus whatever happens here in the coming quarter will most likely have profound long term implications on the greenback.

SPX versus gold – I have a similar more long term chart which I usually pull out to demonstrate what I call the ‘hidden tax on the ignorant’. However what’s also rather interesting is the solid upper trend line that has been forming on the SPX:Gold ratio. It seems that, at least when measured in gold, there is a clear ceiling on the equities side.

You may recall this SPXA200R chart – I post it every once in a while. For the uninitiated – you are looking at the percentage of all SPX symbols trading above their 200-day SMA, it’s an expression of LT market breadth. Once again there is a descending trend line which appears to act as an upper ceiling.

VXV:VIX – which means we are looking at a ratio between quarterly IV vs. 30-day IV. Once again we notice two distinct trend lines – the lower one has been developing all year and appears to be where bounces happen, short or medium term. Another benefit of watching the lower trend line are various bullish divergences that suggested the market was getting ready for a bounce.

The less pronounced and more recent trend line in red is however the one that has my attention currently. It’s clearly pointing downward suggesting that market makers are expecting potential trouble ahead in the new year. Perhaps it’s nothing and we’ll bust through it in the final weeks. But if not then I suggest extreme caution on the equities side as we head into January.

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Cheers,

This entry was posted on Sunday, December 16th, 2012 at 11:07 am. Both comments and pings are currently closed.



  • AMCabrera

    nope shopping are for closer. Thanks Kaiser.

  • http://evilspeculator.com molecool

    De nada, señor.

  • MrMargin

    Take a look at the $SPX P&F – new price objective.

  • AmazingLarry

    I’m still seeing that bearish 1380 from before. What are you seeing?

    I’m no P&F expert, but the RUT has a prelim bullish now of 980. Hmmm….

  • MrMargin

    1510 on SPX

  • AMCabrera

    they say eur/jpy has opened up 2 big firgures.

  • AMCabrera
  • itcomesupinwaves

    Wow. Haven’t seen a gap that big in a long time.

  • tradem4alpha

     Exhaustion? I mean…things like these are pretty scary http://1.bp.blogspot.com/-gTWfU5d1MGI/UMR6fcqOF_I/AAAAAAAAOgA/hxKZdqo1uBc/s1600/Carry+Trade+COT.png Can’t find a link now, but on the S&P COT position look similar.

  • newbfxtrader

    http://www.barchart.com/futures/cot.php
    The Australian dollar and Japanese yen COT are at over five year extremes. But not for the S&P.

  • AMCabrera

    89 .04 aud/jpy.

  • AMCabrera

    tell me about it. Five minutes ago I just saw the jump already deeply negative in this catacomb of a pair.

  • tradem4alpha
  • newbfxtrader

    Sure but look at the aussie and yen man…..

  • AMCabrera

    what is amazing is the fact that I though 88 was a great entry..I feel like a huge fool.

  • newbfxtrader

    I did tell you wait until Sunday for election results. 

  • Skynard

    Now we can find an entry for that sucka:)

  • http://evilspeculator.com molecool

    Very useful – thanks for that.

  • Microwave_Prince

    US has left the Syrian coast. EU NATO countries and Israel left to deal with the problem themselves… oh and Russia.

  • newbfxtrader

    Mother of all gap ups….!

  • fast and steady

     Wtf? I am down 6 grand on my aud/jpy short from friday. Oh boy, am I an idiot for having tried to pick a top on this . I remember telling myself 4 weeks ago: “I’m only doing long trades on this beast”. But no, I had to break my own rules (again). Oh boy, do I feel like slapping myself silly. My turn to do a “fuhrer in the bunker” short movie. :)

  • fast and steady

    I can’t believe this shit. I had never ever traded or even thought about aud/jpy. until the start of November. When I saw the chart and the resistance from the last top I became OBSESSED with picking a top in this thing. Plenty of small trades with small gains and losses followed by this big fiasco over the weekend.

  • newbfxtrader

    We have all been there done that. You could play the gap fill.

  • newbfxtrader

    Tell me you took the other side of the gap!

  • Skynard

    Not yet Bro, will be short this week. Careful of that one.

  • Skynard

    May even attempt to make a new high here:)

  • AMCabrera

     You went short more than five lots over the weekend mate? I only went half lot.

  • Skynard

    Don’t panic Bro, keep your head about you. This week IMO you will see an exhaustion. Did you hedge the drop?

  • AMCabrera

    Hey you are not close to a margin call are you?

  • BobbyLow

    That’s for sure.  Last week I got bit for a third time in a row on that mo fo.  It’s going to have to show me some weakness before I ever try to hit it again.  

    OTOH, sometimes you drop a line and come up with with some decent size fish.  Fortunately I carried my longs on EUR/JPY, EUR/AUD, USD/JPY and Short on AUD/CHF over this weekend which has made for a nice early Sunday Evening indeed.

    Now if the Patriots beat the 49rs later on tonight it could even be a better night.  :)

  • Skynard

    Have had this hourly trend line for nearly three weeks now. Ran right up the ladder:)

    Another fake out H&S.

  • newbfxtrader

    Unreal…

  • fast and steady

     Lots? I went short 600,000 aud.

  • Skynard

    Will be net short before the week is out. We may see that 1500, it’s OPX week:)

  • http://dartht.blogspot.com/ Zen_Gerb

    just checked in ….and ho ho ho
    gap up.
    nothing like jumping the fire line.

  • Skynard

     Hit your target Mate:)

  • http://dartht.blogspot.com/ Zen_Gerb

    welcome to the club.  nothing like a big scar to remember a lesson.
    hope it wasn’t too deep.  I’ve been calling for 87 or 89.  someone even said 90.
    this could be exhaustion.
    -Gerb

  • newbfxtrader

    Definitely hit your target and then some!

  • http://dartht.blogspot.com/ Zen_Gerb

    2 year Tee, mother of Perl.
    AMC, you didn’t get smacked did ya?

    http://s10.postimage.org/n40f5gr0n/temp1.png

  • http://dartht.blogspot.com/ Zen_Gerb

    fight the T bro?  (sigh) I tried to help.

  • Skynard

    Long Yen very soon for ST! Weekly chart

  • fast and steady

     Way too many scars , dude!

  • http://dartht.blogspot.com/ Zen_Gerb

    then you’ve come to the right place.

    For the past twenty-five years, William Eckhardt has demonstrated that following strict risk and moneymanagement rules can be the keys to a trader’s survival: “One common adage on this subject that iscompletely wrongheaded is: You can’t go broke taking profits. That’s precisely how many trader do go broke.While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problemin a nutshell is that human nature does not operate to maximize gain but rather to maximize thechance of gain. The desire to maximize the number of winning trades (or minimize the number of losingtraders) works against the trader. The market likes to lull you into the false security of high success ratetechniques, which often lose disastrously in the long run. The general idea is that what works most of thetime is nearly the opposite of what works in the long run. What really matters is the long-run distributionof outcomes form your trading techniques, systems, and procedures. But, psychologically, what seems ofparamount importance is whether the positions that you have right now are going to work. Current positionsseem to be crucial beyond any statistical justification. Two of the cardinal sins of trading (giving losses toomuch rope and taking profits prematurely) are both attempts to make current positions more likely tosucceed, to the severe detriment of long-term performance. The market behaves much like an opponentwho is trying to teach you to trade poorly. I don’t want to suggest that the market actually has intentions,because it doesn’t. Anybody who as traded for a while begin to feel that the markets have certain personalcharacteristics. Very often the feeling you get is that “they are out to get you”, which is simply apersonalization of the process. This illusion is well founded: the market does behave very much like a tutorwho is trying to instill poor trading techniques. Most people learn this lesson only too well…”

  • AMCabrera

    Yea Ive been smacked. Just utterly amazing. This reminds me of a wrestling match I had once. I had tampon in my bloody nose, cotton mouth from exhaustion, and nearly puke when it was all done. 

  • AMCabrera

    At the risk of sounding like a complete bafoon order books are just amazing.

  • newbfxtrader

    Its been clear skies for a couple weeks now!

  • Skynard

    Long /ES 1420, see what she’s got.

  • AMCabrera

    I know. That is another reason why I stopped going long /jpy pairs and tried shorts a few weeks back. Obviously I was much better off just holding on to gbp/jpy and eur/jpy longs. Granted I have not taken an ass beating from it as I stepped out of the way once 85.90 was taken out. But damn I try a short at EIGHTY EIGHT boom negative 65 pips.

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/d3104d6b-7130-4894-9f65-4089927eb008/2012-12-16_1923.png
    you know what I bringing her out. My favorite of all time the gbp/jpy she as never done me wrong whether I go long or short I always seem to do better with gbp/pairs dont ask me why. So im just gonna shallow half my loss in the aud/jpy and go short gbp/jpy .

  • newbfxtrader

    You could try pairs that havent been on the risk carnage like usd/cad or something. My point being usd/cad hasnt made new lows while the rest of the commodity currencies have been making new highs.

  • Skynard

    /ZW with an ID/NR7

  • Skynard

    Check out /NKD, big move.

  • captainboom

    Heh.  Just read this last week in the book I’m reading.  Very true.

  • itcomesupinwaves

     Hey sky can u share the ID/NR7 code you have on TOS?

  • AmazingLarry

    Oh noes! Don’t let the mean, hungry dragon eat all the silver!

    God i’m bored. Get this shit over with already.

  • newbfxtrader

    Very funny. If it didnt go up last week on unlimited QE it aint going up now. Look to buy at a lower point of support.

  • newbfxtrader

    Seriously theres insane fireworks over in FX side. Stop being bored and come join the party.

  • captainboom

    Are you still on the December contract?  Roll date was last week.

  • AmazingLarry

    Yes, it’s in the pipeline. World ends in 5 days, not gonna start my account NOW! Seriously, I know I miss a lot of the fun, but I have a plan and the current mode is not yet complete. Till then, one rat must live vicariously through another. 

  • AmazingLarry

    Ready to pounce when the time comes. I’m sure my $ fiat will double it’s value by the time the spring thaw comes and I can bury another bucket of metal. ;)

  • Skynard

    Yes, was already long and held through the w/e. Added and will sell by Wed and look to short Mar. Should be good through then.

  • orderbook

    Todays institutional orderboard (As of 6 am London) for EURUSD, EURJPY, USDJPY, EURGBP updated at TNIFEED
    EURUSD Orderboard
    $ 1.3300 Stops$ 1.3250 Stops$ 1.3220 Stops$ 1.3190 Offers into .3200$ 1.3120 Demand on approach$ 1.3100 Demand on approach$ 1.3070 Medium demand$ 1.3050 Medium demand$ 1.3041 Thursday Dec 13 low

  • Ivan

    One breakthrough that comes (in the fullness of time) is when one stops trading a view and starts trading a ruleset … the latter takes the ego and the pain out of the equation … it becomes a simple matter of following the rules.

  • http://evilspeculator.com molecool

    Trading is an activity completely orthogonal to human nature. Only a small minority succeed – perhaps five out of a hundred, if that. Eckhard proved however that it is a skill that can be learned. It takes discipline and it takes time to unlearn old habits and cognitive biases we all acquire during our childhood. Succeeding as a trader can be one of the most liberating skills for a person as it allows you to pursue your trade whenever and wherever you are. It doesn’t matter how you look, what ethnicity you are, how old you are – all that matters are your smarts and your experience.

    Eckhards experiment was in part the inspiration for this blog. Instead of turtles the evil Mole however breeds stainless steel rats – well trained and disciplined traders who can stand on their own. We all trade against each other by banding together and sharing our skills we become a force to be reckoned with.

  • newbfxtrader

    Insane gap up yesterday. You dont need a FX account. You could have gone long /6J or short /6A to play the gap.

  • Skynard

    Spoos back on the move:)

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
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    ¸„ø¤º°¨ P O S T “°º¤ø„¸
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